Grupo Comercial Chedraui SAB de CV
BMV:CHDRAUIB
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Grupo Comercial Chedraui SAB de CV
Earnings Call Analysis
Q2-2024 Analysis
Grupo Comercial Chedraui SAB de CV
Grupo Comercial Chedraui's second quarter results highlight an impressive performance in their Mexican operations. The company achieved a 5.5% growth in same-store sales, surpassing ANTAD's 3.5% growth for the 16th consecutive quarter. The increase was driven by the effectiveness of their Mi Chedraui loyalty program, which saw a 12.8% rise in customer participation, with 71% of sales now coming from loyalty members.
Chedraui USA experienced a rebound in the second quarter after two quarters of negative same-store sales. This segment achieved a 1.4% increase in same-store sales in dollar terms, aided by the mid-single-digit growth of their El Super and Fiesta Mart banners. Overall, total sales in dollars increased by 2.4%, with a 1.5% increase in sales floor area contributing to this growth.
Consolidated sales rose by 4.5% to MXN 67,453 million compared to Q2 2023. The EBITDA margin improved by 9 basis points to 9.1%, a record level for the company. Net income saw an 8.3% increase, reaching MXN 2,017 million and representing 3% of sales. The return on equity improved by 43 basis points, reaching 18.5%.
During the quarter, Grupo Comercial Chedraui reduced its debt by $22.5 million, closing the quarter with a total debt balance of $464 million. The company's fiscal year-to-date CapEx reached MXN 5,036 million, equivalent to 3.8% of sales, marking a 63% increase from the previous year. This investment primarily went towards opening new stores in Mexico and the U.S., as well as a new distribution center in California.
Improved inventory management and efficient promotion strategies in Mexico and the U.S. helped drive these positive results. Despite higher operating expenses due to increased labor costs, the company's strong focus on operational efficiencies allowed them to achieve higher EBITDA margins. Notably, the combined EBITDA margin for El Super and Fiesta Mart expanded by 72 basis points, achieving 9.4%.
Looking ahead, Grupo Comercial Chedraui remains optimistic about its growth prospects. The company expects to maintain a 7% same-store sales growth in Mexico despite the challenging economic environment. Additionally, management is prepared for potential competitive pricing pressures and remains confident in their ability to sustain profitability through a robust and efficient cost structure.
Smart & Final showed signs of recovery with a significant improvement in sales trends. Management expressed optimism about a continued positive trend in Q3, driven by brand awareness and sales initiatives launched in May. The focus is on converting event and stock-up shoppers into everyday shoppers, with particular emphasis on strengthening the produce and meat departments.
The company's strategic focus remains on the U.S. market, particularly targeting the Hispanic consumer base, which has a larger buying power. While expansion in Central America has been considered, the decision was made to concentrate efforts on the U.S., where the Hispanic market continues to grow robustly.
Chedraui faced some challenges, including operational pressures from new government regulations and permit delays due to local elections. Despite these challenges, the company successfully adapted by increasing their sales floor area and maintaining continuity in store operations.
Overall, Grupo Comercial Chedraui delivered a solid second-quarter performance characterized by strong sales growth, improved margins, and strategic investments. The company remains well-positioned to navigate potential challenges and continue delivering value through operational efficiency and focused growth initiatives.
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Good morning to all participants, and welcome to Grupo Comercial Chedraui's Second Quarter 2024 Conference Call. Participating in the conference call today will be Mr. Jose Antonio Chedraui, CEO of Grupo Comercial Chedraui; Mr. Carlos Smith, CEO of Chedraui USA; Humberto Tafolla, CFO; and Arturo Velázquez, IRO for the company. We will begin the call with initial comments on Grupo Comercial Chedraui's second quarter financial results by the company's CEO, Mr. Jose Antonio Chedraui.
Good morning to all, and welcome to our presentation of Grupo Comercial Chedraui's Second Quarter 2024 results. I want to begin by expressing my gratitude to all our employees for their dedicated efforts in executing our strategic initiatives of offering the lowest prices, the best assortment by store and an exceptional customer experience. These efforts combined to drive our outstanding success in the quarter. The preference of our customers in Mexico played a major role in driving our same-store sales growth, which exceeded ANTAD for the 16th consecutive quarter. El Super and Fiesta Mart also contributed significantly by achieving mid-single-digit growth and helping Chedraui USA achieved a 1.4% increase in same-store sales in dollar terms.
To start our presentation, please turn to Slide 4, where I will highlight key achievements of the second quarter. Consolidated sales growth was driven by all business segments. Same-store sales in Mexico grew by 5.5%, outperforming in ANTAD 3.5%. Chedraui USA's same-store sales increased 1.4% in dollars, rebounding after 2 negative quarters. Consolidated EBITDA margin improved by 9 basis points, driven by higher margins in Mexico, El Super and Fiesta Mart. Net cash debt-to-EBITDA ratio improved to minus 0.02x. Return on equity improved by 43 basis points. In the following slides, I will comment with more detail on these key highlights.
Please turn to Slide 5. I Sales for all our businesses grew during the quarter, which translated into a 4.5% consolidated sales increase compared to the second quarter of 2023. The currency impact on Chedraui USA sales when translated into Mexican pesos was marginal in this period at only negative 0.6%. Our consolidated EBITDA increased 5.5% and EBITDA margin was higher by 9 basis points to 9.1%, a record level for the company. This EBITDA increase is explained by improved inventory management and an efficient promotion strategy in Mexico and the U.S. which combined to compensate for higher labor costs.
On Slide 6, consolidated net income continued to show a positive long-term growth trend with a compound annual growth rate over the last 4 years of 31.2%, higher EBITDA levels and lower financial expenses explain these results. As I previously shared, we are committed to improving our profitability levels, which can be observed by a return on equity result of 18.5% and a 43 basis points increase compared to the second quarter of 2023.
In the following slides, we will review the main highlights of our businesses in Mexico and the U.S. On Slide 7, Chedraui's same-store sales in Mexico exceeded ANTAD's level for the 16th consecutive quarter, growing in the second quarter by 5.5% compared to ANTAD's 3.5%. This result considers the adverse calendar effect related to the Easter period in April. We believe our Mi Chedraui loyalty program is an essential element of our value proposition to our customers by delivering the best promotions in our various store formats. This loyalty program allows us to personalize customer promotions based on their individual preferences and consumption trends. Over the last 12 months, Mi Chedraui experienced 12.8% customer growth and 71% of our sales now come from loyalty program customers.
Please turn to Slide 8. The positive results in same-store sales and a 2.8% increase in sales floor area drove to a 7.6% consolidated sales growth compared to the second quarter of 2023. EBITDA posted a 10.4% increase compared to the same period last year as operating leverage, improved inventory and promotion management mitigated the impact of higher labor costs. EBITDA margin ended at 8.7%, a 23 basis point improvement versus the prior comparative quarter.
Finally, on Slide 9, we will review the highlights of our Real Estate division. Our occupancy rate increased to 98.2% from 96.6% in the second quarter of 2023. Sales continued to show positive trends with a 9.6% increase compared to the same quarter of 2023, amounting to MXN 359 million. Over the last 12 months, 15,002 square meters of leasable area were incorporated, representing 3.5% annual growth. EBITDA increased 3.8% and represented 62.6% of sales. I will now turn the meeting over to Carlos Smith, CEO of Chedraui USA for his comments on our U.S. operation. Carlos, please go ahead.
Thank you, Antonio. Please turn to Slide 10. I -- our employees' dedication to executing our strategy of providing our customers with the products they want at the best possible prices together with our store remodeling initiatives drove higher customer count, particularly at our El Super and Fiesta banners. This focus drove positive same-store sales in the quarter after 2 negative quarters as sales at El Super and Fiesta Mart more than compensated for the decline in same-store sales at Smart & Final. Same-store sales grew 1.4% in dollar terms, while total sales increased by 2.4%. The total sales increase was aided by a 1.5% increase in sales floor expansion over the last 12 months. In Mexican pesos, due to the marginal foreign exchange impact of negative 0.6%, Chedraui USA's total sales increased by 1.8%. As part of our continued organic growth program, we opened 3 new stores in the quarter, one at each banner, including the first Fiesta Mart store opening since 2015. El Super and Fiesta growth continued to exceed expectations, posting mid- to high single-digit growth for same-store sales, fueled by strong increases in customer count. Smart & Final sales continued to be impacted by lower average transaction size, mainly in our sales to small businesses, which represent 30% of total sales. However, we started to see sales improvements compared to the 2 previous quarters due to the various sales initiatives.
Please turn to Slide 11. In the quarter, EBITDA increased by 2.6% in dollar terms and 1.7% in Mexican pesos. EBITDA margin was flat, representing 8.9% of sales. It's noteworthy to mention that El Super and Fiesta Mart reached a combined EBITDA margin of 9.4%, a 72 basis point expansion compared to the same quarter of 2023, explained by continued operational efficiencies and leveraging our controlled cost structure. These results compensated for the decline in Smart & Final's EBITDA margin to 8.6% as this banner was affected by diminished operating efficiencies due to lower sales and some expenses related to the start of operations of our new distribution center, which started receiving and shipping limited quantities at the end of Q2. During the quarter, we paid down $22.5 million in debt, ending the quarter with long-term debt of $449.5 million and short-term debt of $14.75 million for a total debt balance of $464 million. This concludes our report on the U.S. operation.
Thank you, Carlos. We now turn to the consolidated financial results on Slide 12. Consolidated sales amounted to 67,453 million, a 4.5% decrease year-over-year, driven by higher sales in all our businesses. Gross profit rose 7.6% with a 70 basis point improvement in gross margin. This is due to effective inventory and promotion management in Mexico and the U.S. Consolidated operating expenses, excluding depreciation and amortization, increased 8.9%, mainly resulting from an increase in labor costs in Mexico and in the U.S. Consolidated EBITDA grew 5.5% to MXN 6,136 million, representing 9.1% of sales and up 9 basis points from Q2 2023. Financial expenses increased 0.6% to MXN 1,190 million as higher interest income was offset by an increase in credit and debit card fees, as well as higher interest on the capitalization of income of new properties. Moving on to consolidated net income, it increased 8.3% to MXN 2,017 million and represented 3% of sales compared to 2.9% in the second quarter of 2023.
Finally, please move to Slide 13. Due to a positive net cash balance, our financial leverage in the quarter was minus 0.02x compared to 0.12x in the same period last year. This improvement includes the impact of MXN 1,146 million ordinary dividend paid to our shareholders on April 16, which calculates to MXN 1.1889 per share. Fiscal year-to-date CapEx invested reached MXN 5,036 million, equivalent to 3.8% of sales and 63% higher than previous year. This is explained by an increase in the opening of stores in Mexico and the United States as well as the investment made in the new distribution center in California, United States. It is important to highlight that the resources generated by our operations allowed us to fund this higher CapEx and improve our cash position to the previous year. Now if you allow me, we will move on to the question-and-answer session.
[Operator Instructions] Our first question is from Rahi Park with Barclays.
Awesome. Just first, Smart & Final. Within your PR, you mentioned a better sales trend starting to come up. I'm just wondering how much of the improvement is from the large-scale ad campaign for Smart & Final that you mentioned last quarter, which would start in May? And what's the outlook for the format second half? Should we see continued improvement sequentially? And I have a follow-up thereafter.
Yes. So as you saw, Q2 showed a significant improvement in our sales trend at Smart & Final, although not necessarily where we want to be. We expect that continued improving trend in Q3. We're very hopeful that we'll be close to flat and begin to see some positive comps. Brand awareness campaign that started on 5/21 has been launched. We think it's going to be a very successful campaign. But as you -- as many of you know, a brand awareness campaign takes time. So we're being patient, but I think it's going to do what we want -- it's going to meet its objectives, which is to reintroduce the Smart & Final brand to new consumers, which is an important component of our strategy to re-lift sales at Smart & Final.
That makes total sense. And then also for the quarter, what product categories do you see that showed overall strength? And then which ones do you think showed weakness? Any signs?
Yes. I think that in the quarter, we started seeing the recovery of our dairy categories at Smart & Final. We're seeing some improved penetration in the produce category, which is very important for another one of our key strategies at Smart & Final, which is to get folks that are already in the store as event shoppers or stock-up shoppers to convert to everyday shoppers. And for us, that strategy begins with strengthening our produce departments and our meat departments, basically are perishables. -- which is how you drive frequency into the store. And we're going to do that through a combination of pricing initiatives, freshness and quality and obviously, very focused assortment and good merchandising techniques in store.
And is there a difference within like the -- your other markets? Do you see any other weakness for -- beyond the U.S. in certain categories -- in the Mexican market?
No. As you saw, the Hispanic markets, El Super and Fiesta performed very, very well. They did so through primarily a very strong customer count increase, which I think speaks strongly to the strength of our value proposition at those banners. As we've talked about before, we've spent a lot of time and effort in improving our perishable sales mix at Fiesta, similar to what we're doing at Smart & Final. And you're seeing some of those -- the fruits of that labor. It's not overnight, and we're being recognized by the strength of those categories and the pricing and value that we offer our consumers something that has been entrenched over many years at El Super. And at a time when consumers are very focused on stretching their dollar and are very cautious, those types of formats do well. So our expectation is that those 2 banners will also have a strong third quarter. And we understand that we're going up against some very difficult comps in Q4, but we are very bullish on both quarters at those banners.
Our next question is from [ Tiago Hardin ] with Citi.
I wanted to discuss a bit on the Mexico environment, the consumer environment, right? So maybe if we could discuss the same-store sales dynamic. If there's anything worth mentioning here between traffic and ticket? And how did you see the dynamic for the quarter throughout the different months, right? And yes, I mean maybe wanting to understand what's the outlook here, specifically for traffic inside the same-store sales going forward that are mid- to long term? And that would be it.
[ Tiago ], thank you for your question. Well, it is important to mention that we had difficult comps due to Easter season that moved up to first quarter this year, and we had it in the second quarter last year. So we had those difficult comps. We keep gaining market share, same-store sales -- We beat ANTAD by 200 basis points. So we keep gaining market share. And that's throughout all regions. We suffered the effect of the movement of the Easter season, mostly in the tourist areas where we have a big presence. We grew pretty strong in those areas last year. So we had a very difficult comparison base. And that's probably affecting us more than any other retailers. But we -- I think we achieved quite good results because even with those comparison basis, we were able to beat ANTAD again in Mexico. Our growth have been in both concepts. I mean, we grew traffic and we were able to grow ticket as well, both. And that happens in every region where we participate. So I think that we had -- in terms of sales due to those reasons that I explained, a very reasonable good quarter. Looking forward, we see that consumption still positive. We keep beating our difficult comps month by month, day by day. So we still feel bullish about it. So that's what I would say about the Mexico environment and same-store sales growth. I don't know if that clarifies your question, [ Tiago ].
Absolutely. Very clear.
Our next question is from Fernando Herrera with Compass Group.
First of all, congrats on the turnaround [indiscernible] in the U.S. operations. I was just wondering if you can provide any more color regarding the strike situation that it's going on in the U.S. and how it has impact how the logistic part of the business? And also how much has been the impact of that situation?
Yes. Allow me to give you some context. As we've mentioned before, we've known since day 1 that our distribution network of 5 DCs in the U.S. in California, in particular, is at capacity. We've done a lot of work and we did a lot of work internally and with outside consultants to determine what the long-term solution is. And that is to operate out of a large facility that integrates our operations. That facility will allow us to add new stores to improve service levels to the stores and to lower transportation costs. However, this does imply closing down facilities, which is never easy. On June 19, we had a work stoppage at 2 of our facilities. We're not all, but a majority of our associates decided to strike that. We implemented our contingency plans immediately with additional staffing, and we continue to receive product and ship product to our stores. So given that we continue negotiations with the union and given the legal nature of these discussions, it's probably as much as I can say at this time.
Our next question is from Rodrigo Alcantara with UBS.
With -- in Mexico, if I may. So next year, I mean, we know wage is likely to increase 11%, right, which is better, right, than the 20% that we have seen in the last 5 years. So my question would be for next year, do you see OpEx pressures may be easing relative to current year and previous years. Therefore, you see the chances for you to expand your margins in Mexico higher? That would be my question.
Thank you, Rodrigo. Well, thank you for your question. If I understood well, we expect for next year an increase of 11% in the medium wage. Therefore, OpEx would be easing a little bit compared to what we have experienced in the past 2 years. Is that the question, Rodrigo?
Yes. actually the question is if you agree or not in that premise that maybe next year, the labor expenses could be lower than what we have seen over the last 5 to 6 years.
I do think that, yes, we have lived through a continuous wage growth, very, very strong over inflation, and we expect that it will be reduced. Therefore, yes, we believe there would be probably less pressure than what we have had in the past 2 years. Being said that, I think that Chedraui is very well positioned with a very efficient cost structure that even if pressures on the wage side continue, we have a pretty strong and efficient base that will allow us to sustain our profitability with the cost structure that we have put in place. Our sales by store, by square meter in every region allows us to reduce the participation of the fixed cost in our operation, and that reduces the pressure. So I agree, we expect less pressure, but we are prepared with a very, very good and efficient cost structure, Rodrigo.
Got it. And lastly, on the gross margin, if you see room for further expansion of your gross margin in Mexico? That will be it.
Rodrigo, we keep expanding because we are operating better on the inventory side, we keep buying better. And every month, we see a reduction in our old inventory that allows us to reduce markdowns. And I think it's a positive cycle that keeps benefiting on the gross margin without affecting the pricing strategy that keeps following our philosophy of operating with the best prices in every particular region that we service. This quarter was not the exception, even with the pressures on the sales side, growth because of the high comparison base that we had, due to the movement of the Easter season, we still were able to grow our EBITDA margin by 23 basis. So we are very bullish about this, and we think we're going to be able to keep growing our EBITDA margins in the future.
Our next question is from Bob Ford with Bank of America.
Congratulations on the quarter. Carlos, what were the big enablers to improvements in the perishables and the pricing at El Super and Fiesta? And how are competitors responding? And Antonio, how are you thinking about your value proposition in Mexico versus competition? And what are the biggest points of differentiation? And are you beginning to see any greater price elasticity or payroll cycle sensitivity in Mexico?
Bob, look, I think that once again, -- as you know, El Super is well entrenched in the markets it's operating in as a price leader and a very strong perishable operator. We provide excellent value at a time where consumers are shopping more frequently. So the price gaps with our competition continue to be as wide as they were pre-pandemic, post-pandemic. And I think that has continued to help us super position itself as a very attractive shopping lookout for consumers. Over time, and -- over time at Fiesta, the same thing is beginning to happen. We spent a lot of money, as you know, remodeling and upgrading stores. We spent a lot of money on price initiatives that are taking hold in the market, and we're slowly seeing that same type of evolution at the Fiesta store, something that we're very happy about. But that journey is nowhere near completed. Having said that, there -- we have seen a little bit of inflation in meat and produce. And the formats that have more exposure from a sales mix standpoint tend to benefit during those times. The flip side is when you have a lot of deflation in commodities, those formats tend to suffer. But overall, I think it's just a recognition of the value proposition, both in the perishable side and in center store.
That's helpful. And then I guess as things slow down and you do see greater elasticity, one might think that you can still take -- or the environment facilitates greater share shifts. Is that fair?
Yes, it is fair. And our Nielsen share gains at both of those formats have been very impressive when compared against the rest of market.
Thank you, Bob, about the differentiation in Mexico. Well, I think Chedraui does probably the best job among retailers, adjusting assortment, shopping experience in our physical stores, price and the use of Mi Chedraui. We buy every format and every region that we operate. I think that the shopping experience that we offer our customers really adjust, we believe, to their particular needs in every region. We are very flexible adjusting those -- in those particular areas, assortment, shopping experience, pricing strategy and the use of Mi Chedraui that does not service the customers by groups or by areas, but by a particular customer with a name and last name included and all the info that goes around it. So we're very focused on that, which is what we believe makes us different from other retailers.
No, it's very interesting, Antonio. And are you beginning to see any greater price elasticity or payroll cycle sensitivity?
Well, we've seen some aggressiveness probably due to this particular summer season were always our high-low competitors become very strong with big offers that we compete against. But now we see also Walmart, for example, being more aggressive than what they used to be, participating in this particular season, and we are reacting to that. And maybe due to the change of the Easter season, it's difficult to evaluate the price elasticity from these promotional activities. But at the moment, without considering that particular Q, but mainly focusing probably in July. What I see is a little bit the effect of having a weakened less -- that means a Saturday and a Sunday that affects the month, maybe that's putting a little bit more pressure and difficult to evaluate. But I don't see any big change from what has been going.
Very helpful. And again, congratulations.
Our next question is from Alvaro Garcia with BTG Pactual.
Congrats on results. I have 2 questions. One is sort of your -- have you ever thought of entering Guatemala or operating in Guatemala's economy that's done quite well over the last couple of years? There's obviously geographic proximity to some of your stores in the South. And I was curious of your thoughts on that market. I'll stop there, and I'll ask my second question after that.
Well, we've thought about Guatemala and Central Latin America, but we decided to go the other way. We believe there is a bigger Mexican, Hispanic consumer in the U.S. with a bigger, larger buying power than the Central America. So we decided to focus on the U.S. Hispanic that is a lot bigger and keeps growing. We believe that retail is very local and that you always have to have local capabilities to be able to service properly the consumer -- and that's probably the second reason that even though it's very close, even though that we sell in our South border stores a lot to the Guatemalans, still a different type of consumer that needs to be serviced particularly. So we decided to focus the other way around, Alvaro.
Great. And just zooming into sort of a discussion we've had on Mexico throughout the call. We saw a nice gross margin gain. We've seen a lot of gross margin gains from a lot of your competitors and everyone is sort of talking about better merchandising, better inventory management, less discounts and whatnot. But into the second half of the year, it just feels like we're in an environment where if you want to gain traffic share, you might have to get a little bit more competitive on price. Do you think that's fair? Or do you think pricing will be steady into the second half of the year?
I think that we are experiencing -- we're probably will experience a reduction in the inflation trend, and that puts pressure on sales, and that puts pressure on the competitive environment. That's what we expect, and we are prepared for that. We -- it's a very strong factor in our value proposition is the pricing strategy, and that's where we think we differentiate probably the most. And we think that we are prepared for probably a more aggressive pricing environment in the coming months.
Yes. Makes a lot of sense. Thank you very much for your comments. Congrats again.
Our next question is from Daniela Brett with HSBC.
Congratulations on the results. we know that elections changed a little bit the calendar of events, the promotions for several retailers. So I wondered if you could comment on what is your expectation for the Q3 and in general, the second half of the year, given that there was this concentration of the government transfer payment in the first quarter as well as PTU from companies. So can you give us a little color on whether elections may change or not your commercial calendar and just your overall consumer sentiment for the second half of the year?
Thank you for your question, Daniela. Well, elections usually help on the consumption side because there is a government expenditure, which already happened. But we do expect to be able to maintain our same-store sales growth in Mexico, at least that's the trend that is looking forward -- and that has happened after the elections. So we project to maintain our guidance being able to increase 7% same-store sales growth in Mexico, and we are pretty much in line with that. We feel we're going to be able to achieve it. The most difficult quarter was this particular second quarter because of the comparison base where the -- as I already explained, the Easter season moved up to the first quarter. So we feel pretty comfortable with the same-store sales growth that we are projecting.
And just as a follow-up question. I recently visited some of your Supercitos and a few in areas where you have a lot of competitors, not only 3B, but others. What has the -- I know that it's a still smaller format for you in terms of sales representation, but what has been the performance or results of the Supercito so far? Are you like happy with the way things are going? And is there a need to make any adjustments in the overall assortment given the rapid expansion, especially from tianguis?
Thank you. Well, first of all, thank you for your question about Supercito. I think it's important. We believe that there is a proximity opportunity in the market. We believe that we really service a consumer need. And we decided to differentiate Supercito from the convenience stores and from the hard discounters. We have a better assortment than the typical hard discounters, a lot better. And we also have a better assortment against the convenience store and a huge price gap against the convenience stores. So in said that, we think that we have a format that it's very, very efficient to service that proximity need -- and we're seeing very good results on the Supercito. And we're also being able to adjust the Supercito to the particular communities that we service. We -- at the moment, we also have, for example, Supercito Selecto with a differentiated assortment and shopping experience that allows the consumer to feel that they are really able to take advantage of the proximity and replenish their consumption needs for grocery and perishables. So we think we're doing right, efficient proposition to the consumer that it's doing well. It's also important to mention that due to the elections, which you already talked about, it has been a little before the elections throughout the first and second quarter. And now until the new government takes place, we have had some complications about the permits and the authorizations needed by the local authorities to open the stores that we projected. So we are feeling that -- so we are feeling -- or we are having some pressures that probably will not allow us to open the number of Supercitos that we plan for. We feel we're going to be close to the objective, but we're seeing -- or we suffered some of the change of government that we'll see throughout this first part of the year.
Thank you so much for the update on Supercito and [indiscernible].
Thank you. There are no further questions at this time. I would like to hand the floor back over to Mr. Antonio Chedraui for any closing remarks.
Well, I want to thank everyone for joining our conference. And well, I hope to be talking to you about our third quarter results that we feel very bullish about them because we're in the right path on our opportunities, which basically would be the Smart & Final format that is looking in a positive trend for the near future. All the other retail formats are going really, really well and feel very bullish about this 3Q. Thank you very much, and I hope to be talking to you again in October. Thank you.
This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.